BULLISH THREE GAP DOWNS Definition This is a four day bullish reversal pattern. It consists of three consecutive days each gapping lower on the open. After Three Gap Downs the market becomes extremely oversold and ready for the reversal of the current downtrend. Recognition Criteria 1. The first day can be of any color. 2. The second day also can be of any color, so long as its body gaps down away from the first day’s body. 3. The last two days are black and their bodies must gap down from the bodies of the prior days. Pattern Requirements and Flexibility The first two days of the Bullish Three Gap Downs can be of any color but the last two days should be black. There must be downside body gaps between the candlesticks. Trader’s Behavior The market is oversold with three gaps down in a row and it is time to cover short positions.
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